Explanation of Financial Matters Regarding Hangzhou High-Tech Materials Co., Ltd.'s Application for Issuance of Shares to Specific Targets
Tianjian [2026] No. 951
Shenzhen Stock Exchange:
We acknowledge receipt of the "Inquiry Letter on Financial Matters Regarding Hangzhou High-Tech Materials Co., Ltd.'s Application for Issuance of Shares to Specific Targets" (Inquiry Letter [2026] No. 020055) from Hangzhou High-Tech Materials Co., Ltd. (hereinafter referred to as Hangzhou High-Tech or the Company). We have prudently reviewed the financial matters mentioned in the Inquiry Letter and hereby report as follows.
I. Regarding Net Profit, Gross Profit Margin, and Financial Investment
During the reporting period, the Company experienced continuous losses from 2023 to the first quarter of 2026, with non-recurring net profit remaining negative. The Company's comprehensive gross profit margin declined year by year, and its asset-liability ratio was 72.96%, 79.36%, 84.94%, and 87.99% respectively. As of the end of the reporting period, the net assets attributable to shareholders of the listed company were RMB 31.3797 million. If the Company's proposed issuance of shares to specific targets is not successfully implemented, or if the loss trend cannot be effectively improved, the Company's net assets at the end of the year may turn negative, triggering relevant circumstances for delisting risk warning.
Please provide supplementary explanations: (1) Combined with the operating conditions of each main business, explain the main factors affecting profit, major cost components, product pricing models, and changes in period expenses, to clarify the reasons and reasonableness for the Company's continuous net losses during the reporting period. Whether the factors causing the Company's sustained losses have been eliminated, whether the Company has the ability to continue operating, and the measures to be taken to improve future performance, combined with the business's future development plan. (2) Combined with the industry competition landscape, product situation and pricing mechanisms, and raw material price changes, explain the reasons for the Company's low and continuously declining gross profit margin. Whether the Company's main business products are competitive, and whether the cash flow and profitability are consistent with the trend of comparable companies in the same industry. (3) Combined with the specific circumstances of relevant financial statement items, explain the Company's financial investment (including quasi-financial business) with a large book value held at the end of the most recent period. Detail the specific situation of new financial investments or planned financial investments and quasi-financial businesses made by the Company from six months prior to the resolution of the board of directors' meeting for this issuance to the present. Whether these have been deducted from the total amount of raised funds, and whether they comply with the relevant requirements of the "Securities and Futures Legal Application Opinion No. 18" and the "Supervisory Rules Application Guidelines - Issuance Series No. 7". (Inquiry Letter Question II)
Please have the sponsor and accountant conduct an audit and provide a clear opinion.
(I) Combined with the operating conditions of each main business, explain the main factors affecting profit, major cost components, product pricing models, and changes in period expenses, to clarify the reasons and reasonableness for the Company's continuous net losses during the reporting period. Whether the factors causing the Company's sustained losses have been eliminated, whether the Company has the ability to continue operating, and the measures to be taken to improve future performance, combined with the business's future development plan.
- Company's Main Business Operations
The Company's main business is the research, development, production, and sales of high-performance polymer materials for cables.
High-performance polymer materials for cables, also known as cable materials, refer to polymer materials used in wires and cables for insulation, shielding, and protection. High-performance polymer materials for cables are one of the main raw materials for cable products. In addition to metal conductors and optical fibers, the main structure of cables and optical cables is cable materials.